World heading for a pensions crisis, but no quick fix is in sight
Do you know what age you are planning on retiring at? Have you saved up enough money to retire?
While these questions may appear simple, the answers are not.
A new report from the Word Economic Forum, ‘We’ll live to 100 – How can we afford it?’, takes a more in-depth look at the global pension crisis being faced by governments, and here are five of its key findings.
1. We are living much longer than pension systems were designed to support.
Life expectancy has increased. The number of years of retirement income that had to be paid in 1960 was about five to eight years of payments, on average.
Moving on to look at life expectancy in 2015, we can see that pensioners are already living eight to 11 years longer – and in the case of Japan, a massive 16 years longer. What this means is that pension systems are now having to pay benefits for two to three times longer than they were designed for.
2. Unsurprisingly, a gap between what is needed for retirement and what is saved has developed and widened, everywhere.
It is difficult to determine how much money one needs for retirement, and it is often assumed that we will need less money when we retire than we do while working.
There are three main sources of income during retirement: government-sponsored pensions; work or occupational pension plans; and personal savings.
However, because we are living so much longer these days, the gap between savings and what will be needed during retirement is widening, even in countries that have the best-developed pension systems.
Add the two most populous countries in the world, China and India – where pension cover can be extremely patchy – and it adds up to a global pension crisis.
Full Content: Business Insider
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